Consolidated Bank and Trust Corporation vs.

CA
GR No. 138569
September 11, 2003
Facts:
Private respondent LC Diaz filed a complaint
for recovery of sum of money against
Solidbank after the latter refused to return the
money of LC Diaz. When the messenger of LC
Diaz deposited an amount to the bank, he left
the passbook to the teller. When he got back
to get the passbook, he was advised that the
same was retrieved by somebody else.
As a result, there had been an unauthorized
withdrawal of P300,000 against LC Diazs
account. The withdrawal slip bore the
signatures of the authorized signatories of LC
Diaz.
Issue: Whether the bank is liable.
Law:

Article 2176

Case history:
RTC absolved the bank by applying the rules
on savings account written on the passbook.
It states that possession of the book shall
raise the presumption of ownership and any
payments made by the bank upon the
production of said book and entry therein of
the withdrawal shall have the same effect as
if made to the depositor personally. It held
that LC Diazs negligence cause the
unauthorized withdrawal.
CA, on the other hand, ruled that Solidbanks
negligence was the proximate cause of the
unauthorized withdrawal. It ruled that while
LC Diaz was negligent in entrusting its
deposits to its messenger and in leaving the
passbook with the teller, Solidbank cannot
escape liability because of the doctrine of last
clear chance. It further ruled that the degree
of diligence required from Solidbank is more
than that of a good father of a family. Banks
are obligated to treat the accounts of their
depositors with meticulous care, always
having in mind the fiduciary nature of their
relationship with their clients.
Ruling:
The bank is liable for breach of contract due
to negligence or culpa contractual.
The contract between the bank and its
depositor is governed by the provisions of the

Civil Code on simple loan. There is a debtorcreditor relationship between the bank and its
depositor.
However, the fiduciary nature of a bankdepositor does not convert the contract
between the bank and its depositors from a
simple loan to a trust agreement whether
express or implied.
Solidbank tellers must exercise a high degree
of diligence in insuring that they return the
passbook only to the depositor or his
authorized representative.
Solidbank is bound by the negligence of its
employees under the principle of respondeat
superior or command responsibility.
We do not apply the doctrine of last clear
chance to the present case. Solidbank is liable
for breach of contract due to negligence in the
performance of its contractual obligation to LC
Diaz. This is a case of culpa contractual,
where neither the contributory negligence of
the plaintiff nor his last clear chance to avoid
the loss, would exonerate the defendant from
liability. Such contributory negligence or last
clear chance by the plaintiff merely serves to
reduce the recovery of damages by the
plaintiff but does not exculpate the defendant
from his breach of contract.

PNB vs. CA
GR No. 127469
January 15, 2004
Facts:
Private respondent filed with the trial court a
complaint for sum of money with damages
against petitioner PNB.
Issue: Whether the bank is liable
Law:

Sec 2, RA 8791

Case history:
RTC ruled in favor of private respondent and
ordered the bank to return the amount
deposited by the former less the loan due.
CA set aside the ruling of the trial court and
ordered the bank to return the time deposit
made by private respondent.
Ruling:

The bank is liable to Marcos for offsetting his

time deposits with a fictitious promissory
note.
Section 2 of RA 8791 expressly imposes the
fiduciary duty on banks when it declared that
the State recognizes the fiduciary nature of
banking that requires high standards of
integrity and performance.
The fiduciary nature of banking requires
banks to assume a degree of diligence higher
that that of a good father of a family. Thus,
the banks fiduciary duty imposes upon it a
higher level of accountability than that
expected of Marcos, a businessman, who
negligently signed blank forms and entrusted
his certificates of time deposits to Pagsaligan
without retaining copies of the certificates.

A certain Alice Laurel (Laurel) deposited

several checks in favor of respondent. The
deposit of these checks were later reversed
upon request by Laurel. In turn, the amount
that was supposed to be credited to
respondent was cancelled.
The above fraudulent transactions of Laurel
was made possible through BPI tellers failure
to retrieve the duplicate original copies of the
deposit slips from the former, every time they
ask for cancellation or reversal of the deposit
or payment transaction.
Respondent then filed a
damages against petitioner.
Issue: Whether BPI is liable
Law:

PNB vs. Pike

GR No. 157845
September 20, 2005

complaint

for

Section 2, RA 8791

Case history:
RTC ruled in favor of respondent. CA affirmed
the decision of the trial court.

Facts:
Respondent filed a complaint for damages
against petitioner after the latter refused to
return the amount that was withdrawn
without authorization from Pikes dollar
account. When responded demanded to
withdraw the remaining balance of his
account, the bank took it as a bar from
claiming
on the
alleged
unauthorized
withdrawals.
Issue: Whether the bank is liable
unauthorized withdrawals
Law:

Facts:

for

the

Section 2, RA 8791

Case history:
RTC ruled in favor of respondent and held that
the bank is responsible for the unauthorized
withdrawals. CA affirmed the lower courts
decision.
Ruling:
With banks, the degree of diligence required
is more than that of a good father of a family
considering that the business of banking is
imbued with public interest due to the nature
of their functions.

BPI vs. Lifetime Marketing

GR No. 176434
June 25, 2008

Ruling:
Yes.
The court have repeatedly emphasized that
the banking industry is impressed with public
interest. Of paramount importance thereto is
the trust and confidence of public in general.
Accordingly, the highest degree of diligence is
expected, and high standards of integrity and
performance are required of it. By the nature
of its functions, a bank is under obligation to
treat the accounts of its depositors with
meticulous care, always having in mind the
fiduciary nature of its relationship with them.

BPI vs. Casa Montessori

GR No. 149454
May 28, 2004
Facts:
CASA Montessori (CASA) filed a complaint for
collection with damages against petitioner
bank after it discovered that nine checks had
been encashed by a certain Sonny Santos in
the total amount of P782,000.00. it turned out
that the signatures on the checks were made
by the external auditor of CASA.
Issue: Whether the bank is liable

Law:
Case history:
RTC ruled in favor of CASA. However on
appeal, the CA apportioned the loss between
BPI and CASA. It took into account CASAs
contributory negligence that resulted in the
undetected forgery.
Ruling:
Yes.
We have repeatedly emphasized that, since
the banking business is impressed with public
interest, of paramount importance thereto is
the trust and confidence of the public in
general. Consequently, the highest degree of
diligence is expected, and high standards of
integrity and performance are even required,
of it. By the nature of its functions, a bank is
"under obligation to treat the accounts of its
depositors with meticulous care, always
having in mind the fiduciary nature of their
relationship."
BPI contends that it has a signature
verification procedure, in which checks are
honored only when the signatures therein are
verified to be the same with or similar to the
specimen signatures on the signature cards.
Nonetheless, it still failed to detect the eight
instances of forgery. Its negligence consisted
in the omission of that degree of diligence
required of a bank. It cannot now feign
ignorance, for very early on we have already
ruled that a bank is "bound to know the
signatures of its customers; and if it pays a
forged check, it must be considered as
making the payment out of its own funds, and
cannot ordinarily charge the amount so paid
to the account of the depositor whose name
was forged." In fact, BPI was the same bank
involved when we issued this ruling seventy
years ago.

Central Bank of the Philippines vs. Citytrust

Banking Corporation
GR No. 141835
February 4, 2009
Facts:
Respondent filed a complaint for recovery of
sum of money with damages against
petitioner which it alleged erred in encashing
the checks and in charging the proceeds

thereof to its account, despite the lack of

authority of Cayabyab.
It appears that a certain Flores encashed a
check and signed by the name of Cayabyab.
Petitioner then debited the amount against
Citytrust.
Issue: Whether petitioner is liable
Law: Section 2, RA 8791; Art. 2179, Civil Code
Case history:
RTC ruled that both parties were negligent
and accordingly held them liable for the loss.
CA affirmed the trial courts decision and
noted that while respondent failed to take
adequate precautionary measures to prevent
the fraudulent encashment of its checks,
petitioner was not entirely blame-free in light
of its failure to verify the signature of
Citytrusts agent authorized to receive
payment.
Ruling:
Yes.
Petitioners teller Iluminada did not verify
Flores signature on the flimsy excuse that
Flores had had previous transactions with it
for a number of years. That circumstance did
not excuse the teller from focusing attention
to or at least glancing at Flores as he was
signing, and to satisfy herself that the
signature he had just affixed matched that of
his specimen signature. Had she done that,
she would have readily been put on notice
that Flores was affixing, not his but a fictitious
signature.
However, Citytrusts failure to timely examine
its account, cancel the checks and notify
petitioner of their alleged loss/theft should
mitigate petitioners liability, in accordance
with Article 2179 of the Civil Code which
provides that if the plaintiffs negligence was
only contributory, the immediate and
proximate cause of the injury being the
defendants lack of due care, the plaintiff may
recover damages, but the courts shall
mitigate the damages to be awarded. For had
Citytrust timely discovered the loss/theft
and/or
subsequent
encashment,
their
proceeds or part thereof could have been
recovered.

Allied Banking vs. Lim Sio Wan

GR No. 133179
March 27, 2008

Case history:
Facts:
Respondent
filed
a
complaint
against
petitioner to recover the proceeds of her first
money market placement. Allied avers that
respondent
instructed
the
bank
to
preterminate the placement and deposit the
proceeds thereof to Metrobank.
Issue: Whether petitioner is liable
Law:

Arts. 1953, 1980 of the Civil Code

Case history:
RTC ruled in favor of respondent. CA, on
appeal,
ordered
both
petitioner
and
Metrobank to pay plaintiff.
Ruling:
Yes.
The court ruled in a line of cases that a bank
deposit is in the nature of a simple loan or
mutuum.
Notes:
A money market is a market dealing in
standardized short-term credit instruments
where lenders and borrowers do not deal
directly with each other but through a middle
man or dealer in open market. In a money
market transaction, the investor is a lender
who loans his money to a borrower through a
middleman or dealer.

Associated Bank vs. Tan

GR No. 156940
December 14, 2004
Facts:
Respondent
filed
a
complaint
against
petitioner after the latter reversed the deposit
of a check issued in respondents favor. It
averred that it has all the right to debit the
account by reason of the dishonor of the
check was deposited by the respondent which
was withdrawn by him prior to its clearing.
Issue: Whether petitioner has the right to debit
the account of its client for a check
deposit which was dishonored by the
drawee bank.
Law:

The trial court ruled in favor of respondent

and ordered the bank to pay the former. In
making said ruling, it was shown that
[respondent] was not officially informed about
the debiting of the P101,000.00 [from] his
existing balance and that the BANK merely
allowed the [respondent] to use the fund prior
to clearing merely for accommodation
because the BANK considered him as one of
its valued clients. The trial court ruled that the
bank manager was negligent in handling the
particular
checking
account
of
the
[respondent] stating that such lapses caused
all the inconveniences to the [respondent].
CA affirmed the trial courts decision. It ruled
that the bank should not have authorized the
withdrawal of the value of the deposited
check prior to its clearing.
Ruling:
Yes. But the case ultimately revolves around
the issue of whether the bank properly
exercised its right to setoff.
It is undisputed -- nay, even admitted -- that
purportedly as an act of accommodation to a
valued
client,
petitioner
allowed
the
withdrawal of the face value of the deposited
check prior to its clearing. That act certainly
disregarded the clearance requirement of the
banking system. Such a practice is unusual,
because a check is not legal tender or money;
and its value can properly be transferred to a
depositors account only after the check has
been cleared by the drawee bank.